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How The Geeks "Saved" Manufacturing

by Dave Hannon

September 5, 2013

By Dave Hannon

Okay let's get one thing straight -- manufacturing is not dying. Look around you--everything you see was manufactured (unless you're reading this on a tree in the forest). No matter where you live, no matter what market you are buying from and selling into, there is still a lot of manufacturing going on. It's just not the same manufacturing that went on 20, 30, or 50 years ago. And that's a good thing--no industry should remain completely stagnant.

So what's changing about manufacturing? Well a lot of things, but one you don't hear all that much about is the role data is playing in changing (and improving) manufacturing. As Kerstin Geiger, Senior Vice President of Industry Business Solutions, Discrete Manufacturing at SAP, says in her recent SAPinsider article: "Thanks to an unprecedented convergence of technology and business trends, the world of manufacturing today is advancing rapidly, ushering in a new, technology-driven industrial revolution...This industrial revolution is being driven by a dramatic increase in the amount of information available within the manufacturing environment."

The data used to drive manufacturing takes many forms from the data used in the actual manufacturing process (think sensors and M2M) to back office processes (procurement, finance) and right out to the salespeople that drive the top line (think CRM). In another recent SAPinsider article, SAP's Vice President of Solution Management for Idea to Performance Scott Bolick points to 3D imagery and its associated data as a virtual game-changer in manufacturing. "For example, if it’s a product that must be assembled on site, those 3D images can then be used to get the product up and running more efficiently. And when the product requires service later, those 3D images will assist in that service process as well. So you can see how even something as simple as visualization — if that visualization is consistent across development, manufacturing, and service — can bring real benefits. By providing all stakeholders along the product life cycle with access to the same visualizations, you not only improve TCO, you also give people a much greater ability and opportunity to collaborate."

So, that's all well and good, but you want examples of thriving manufacturing companies that are putting this to use. Well, this MarketWatch article about US manufacturing highlights New Balance Athletic Shoe as a manufacturing company that has thrived in the US, where manufacturing is supposed to be on its last breath. As we highlighted in this article in insiderPROFILES last year, New Balance is a great "back office" example, using SAP Business Planning and Consolidation to process its financial data much faster and close its books twice as quickly as it had before. That kind of efficiency certainly drives a company forward.

Back office example not what you're looking for? Well specialty chemical maker Lubrizol went through a major data cleansing and migration project before implementing a new SAP CRM and then mobilizing it to provide its salespeople with real-time access to customer data. The broader (and mobile) access to the data has brought about a number of business benefits, including one that was unexpected: customer perception.

The folks at Lubrizol told me that now, when a salesperson makes a customer visit with an iPad in hand and is able to pull up real-time data, the customer perceives that this salesperson is working for a cutting-edge and technology-savvy company. That’s a very different perception than the one they got when opening their laptops to access offline data.

“We’ve heard from our salespeople that customers view us differently as a result of this project, and that’s something that we didn’t expect,” said IT manager Dan Himmelman.

So it's all good news, right? Manufacturing is using data to become more efficient and more productive and reduce its costs. But here's one last point to throw a wrinkle into all of this. The data itself doesn't make manufacturing more efficient. Even the IT infrastructure, while vital, isn't what turns data into information. It's PEOPLE. Manufacturing needs to develop the analytics talent to make use of data. There's a LOT of talk about hiring trends in manufacturing, but this point is often overlooked -- typically, manufacturers do not have a culture of levering business intelligence. That's the missing link. The manufacturers that develop that strong BI talent pool and "data-driven" culture will outpace their peers.

To read more about how manufacturing is changing, be sure to check out the July 2013 issue of SAPinsider.

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